Wednesday, October 29, 2014

Dodge, and the Italians Dodge with you

Fiat Chrysler Automobiles plans to spin off sports car maker Ferrari
into a separate company, a way to unlock value in the luxury brand and
distinguish it from its mass-market parent.

The company said Wednesday that spinning off Ferrari was part of a plan
to raise capital to support the new merged carmakers' expansion plans.
Fiat Chrysler's five-year plan calls for increasing net income by five
times by 2018.

By selling more Alfa Romeos as Dodge Darts. The widows of John and Horace Dodge sold their husbands' auto company to an investment bank in 1925 for a reported 2 billion inflation adjusted dollars. That bank sold it to Walter Chrysler in 1928. Fiat acquired Chrysler when it was bankrupt in 2008.

Ironically;

The decision to break off Ferrari comes about two months after an
awkward management transition at Ferrari that saw the longtime chairman
Luca di Montezemolo resign after a public spat over strategy with
Marchionne, who has taken over as chairman of Ferrari.

Marchionne has been vocal in his displeasure over Ferrari's long absence
from the Formula One car racing winner's circle, and has pledged to get
the team back to the top. The last time it won the driver's
championship was in 2007.

We say, ironically, because the Dodge brothers' fortune mostly came with their roll of the dice on Henry Ford, who'd frittered away millions of (again, inflation adjusted) dollars of Detroit investors, building a race car back at the turn on the 20th century.

Ford, with nowhere else to turn for financing for his passenger car--his original Model A--agreed to give 10% of the new Ford Motor Co to John and Horace Dodge in return for their machine shop turning out the parts that Ford would assemble into the first mass marketed automobile.